– Front Office (5), and collaboration with Compliance Department (3), Back Office (5), Finance Department (7) Why: A bank should ensure a strong compliance culture throughout its organization, where the board of directors and senior management set the right tone. The board of directors and senior management (including Head of the business and Supervisors) should set a clear risk appetite and ensure a compliance culture where financial crime is not acceptable. The 2LOD ensures that the risks are actively and appropriately managed, and provide an independent effective challenge to the first line of defense. How & Who: Propose the policy framework and sound risk management process and internal control, while also supporting, assisting, and providing recommendations related to ORM approaches to the first line of defense. – All 2LOD
Explain the differences between the types of security offered by the banks in the case. Which bank would you open an account with and why? Bank of America is implementing authentication and authorization technologies such as online computer identification Wells Fargo & Company is implementing authentication and authorization technologies such as additional password criteria E-Trade Financial Corporation is implementing authentication and authorization technologies such as Digital Security IDs Barclay’s Bank is implementing prevention technologies such as online-transfer delays and account monitoring. Armed Force Bank one of my choice to bank with. One thing I like about Armed Force Bank offer low interest rates for mortgage and car loan.
1. Banking Business In order to understand how the governance of RBS influenced the performance of the bank in the period 2000-2008, the fundamental incentives and responsibilities of banks in general must be known. Banks are financial institutions that are licensed to be the receiver of deposits (Investopedia). RBS is by foundation a commercial bank and is thus mainly concerned with management of deposits as well as supply of loans to individuals. In return, the bank uses the deposits for lending activities to earn a profit.
Citigroup Global Markets’ case Name: Affiliation: Discuss how administrative agencies like the Securities and Exchange Commission (SEC) or the Commodities Futures Trading Commission (CFTC) take action in order to be effective in preventing high-risk gambles in securities / banking, a foundation of the economy. The role of the Securities and Exchange Commission (SEC) is to maintain an orderly, fair and efficient market, protect investors as well as to facilitate capital formation. It is the responsibility of the SEC to ensure that companies make full disclosure of financial information in order to protect investors and the general public. The disclosure of meaningful financial information allows investors to make sound decisions on which firms to invest in. On the other hand, the Commodity Futures Trade Commission (CFTC) promotes competitiveness and efficiency in futures and options markets.
Accounting provides economic information from which users can make decisions, therefore has a clear link to financial stability. The role of accounting in the financial crisis primarily refers to the use of fair value accounting, which allows company’s to measure assets and liabilities based on “the price that would be received to sell an asset or paid to transfer a liability” between knowledgeable, willing market participants, in the revaluation of financial instruments, assets and liabilities (Laux and Leuz 2009, p.827). It has been argued that fair value accounting exacerbated the severity of the financial crisis by both “increasing bank’s leverage in the boom” and worsening banks problems in busts by leading to excessive write-downs (Laux and Leuz 2010). One argued result of fair value accounting during the financial crisis is that banks tried to boost their regulatory capital ratio by selling assets in response to fair value losses, which curtailed lending and further decreased market prices; this in turn triggered a continuous downward cycle of write-downs, capital depletion and asset selling (Badertcher, Burks and
This also includes establishing a private-sector regulator to oversee the auditing profession to combat accounting fraud, and enhancing financial disclosures. Companies are under more pressure to comply with SEC and Sarbanes-Oxley Act after recent and growing concerns about their ethical behaviors. Role of Ethics and Compliance in the Financial Environment Starbuck’s role of Ethics and Compliance in the financial environment applies to the Chief Executive Officer (CEO), Chief Financial Officer (CFO), comptroller, and other financial leaders. The company’s code of ethics encompasses
Loosening of Credit Proponents of negative interest rates suggest that when financial intermediaries choose between paying for deposits and receiving income from loans, they will choose the latter. In turn, businesses benefit from this greater amount of credit. Japanisation of the Eurozone However, we mustn’t lose sight of why this proposal is being mooted – to stave off the Eurozone’s deflationary issue. As such, will negative interest rates stem the tide? The answer to this question is simply not clear, but it primarily depends upon expectations of future inflation.
Mini-case 2 Letting Go of Lehman Brothers Question 1: Do you believe that the U.S. government treated some financial institutions differently during the crisis? Was that appropriate? To assure the financial stability and viability of the U.S. financial system, the U.S. Federal Reserve, the Comptroller of the Currency and the Federal Deposit Insurance Company (FDIC) have the responsibility to support, protect and buffer financial institutions whose failures, they believe, might have a significant effect on the market as a whole. Before making a decision about whether an institution should be poured capital into, the Federal Reserve will consider the institution`s collateral and the ability to repay loans. The Federal Reserve said that the companies that did receive bailouts, such as AIG, Fannie Mae and, Freddie Mac, clearly had the collateral and showed great promise of paying them back in the future, while Lehman Brothers did not.
Because the needs for accurate and clear measure of exposure to market volatilities. In the wake of such financial disasters such as Orange County, Barings, Daiwa and Showa Shell, banks and financial service firms recognized the need for accurate, clear measures of exposure to market volatility. The risk management tool known as value-at-risk, or VaR, grew out of this daily report. VaR attempted to answer the question of “how much can I lose with a 95% confidence” using simple mathematical concepts of variance and
There are several issues to consider when comparing the financial ratios of a public company to the industry averages. It is important to allow for any material differences in accounting policies between the specific company and the industry norms. It is also important to determine whether ratios were calculated before or after adjustments were made to the balance sheet or income statement. (Atrill & McLaney, 1997) It is also extremely important that one make sure that the financial data was developed using comparable accounting methods, classification procedures, and valuation bases. I have chosen to analyze Branch Banking & Trusts financial ratios and compare them to industry averages.